Who pays the tax? Turkey's invisible distribution crisis

Tax may be the same for everyone; however, the burden of tax is not the same for everyone. Two citizens who buy the same bread, pay the same bill, and use the same fuel pay the same tax in nominal terms. However, if their incomes are different, the impact this tax creates on their budgets is also different. For this reason, the issue of tax is not only about how much revenue the state collects; it is about from whom, through which tools, and with what understanding of justice this revenue is collected. Because tax policy is one of the fundamental tools that shapes income distribution, equal opportunity, and the sense of social justice beyond budget figures.

The way to understand whether a tax system in a country is fair is not just by looking at the size of the collected tax. What is truly important is which income groups, through which sources, and to what extent the tax is borne. Today, Turkey is going through a period where high inflation, the cost of living, and the deterioration in income distribution are felt simultaneously. While the incomes of employees and retirees lag behind the cost of living, the public's increasing financing need makes tax revenues more important than ever. At this very point, a fundamental question arises: Who actually pays the tax in Turkey?

THE IMBALANCED SCALE: Is the Problem the Amount of Tax or its Distribution?

In Turkey, tax debates are often conducted over the high level of tax rates. However, focusing only on how much tax is collected when evaluating the tax system means missing a significant part of the issue. What should really be questioned is how the tax burden is distributed among different segments of society.

Indeed, international data also show that Turkey's fundamental problem is not just the size of the tax burden. According to the Revenue Statistics 2025 data published by the OECD in December 2025, the ratio of tax and social security revenues to Gross Domestic Product in Turkey rose from 23.2 percent in 2023 to 24.0 percent in 2024. In the same period, the OECD average is at the level of 34.1 percent. With this ratio, Turkey ranks in the lower tiers among 38 OECD countries.

At first glance, this picture might give the impression that the tax burden in Turkey is lower than in developed countries. However, when looking at the issue a little closer, a different reality emerges. The problem is not how much tax the state collects; it is from which sources it collects this tax.

According to the most current detailed data comparable between countries from the OECD, 23.6 percent of total tax revenues in Turkey consists of Value Added Tax (VAT), and 22 percent consists of other taxes on goods and services. In other words, approximately 45.6 percent of tax revenues are obtained directly through consumption. In the OECD average, this rate is at the level of 31.3 percent.

In contrast, the share of taxes collected from personal income, earnings, and capital gains within total tax revenues is 11.3 percent in Turkey, while the OECD average is 23.7 percent. This difference reveals that Turkey has a structure that taxes income and wealth relatively less, and consumption more heavily.

This situation cannot be seen merely as a technical fiscal policy preference. Because the source from which the tax is collected also determines how the economic burden is shared among different segments of society. Therefore, the real test of the tax system is not how much revenue it collects; it is with what understanding of justice it collects this revenue.

THE INVISIBLE TAX ON THE GROCERY RECEIPT: Tax is Equal, Burden is Not Equal

The easiest way to understand the distribution of the tax burden in society is sometimes not to look at budget tables, but at a grocery receipt. Because a significant portion of the tax paid by the citizen does not appear on their payslip; it appears in their shopping basket, electricity bill, fuel pump, and almost every area of daily life.

Indirect taxes such as VAT and Special Consumption Tax (ÖTV) are relatively easy to collect for the public, create a broad tax base, and are important sources of revenue in economies where informality is high. However, the fundamental problem with these taxes is that they do not sufficiently take into account the taxpayer's ability to pay. A low-income employee and a high-income person who buy the same product face the same tax rate.

The rate of the tax may be the same; but the economic burden it creates is not the same.

For example, a low-income household that has to allocate a large portion of its income to mandatory needs such as food, housing, energy, and transportation spends a larger part of its earnings on consumption. In contrast, a high-income household has the opportunity to save, invest, or accumulate wealth with a larger portion of its income. Therefore, while taxes collected through consumption are felt relatively less as income increases, they can create a much heavier burden on the budgets of low-income groups.

For this reason, the equality seen in indirect taxes does not always mean justice in the true sense. Everyone may pay the same VAT rate at the checkout; however, the share of that tax within income is not the same for everyone. Measuring tax justice only with the question “is everyone paying tax at the same rate?” is not enough. The real question is this: Is everyone carrying a tax burden proportional to their economic power?

If a low-income citizen in a country pays their tax not only from their salary but also from their bread, electricity, transportation, and basic needs; it means the tax system is now shaping not only the financing of the budget but also income distribution. This is where the most invisible dimension of Turkey's tax debate emerges: Tax may be applied equally; but the economic burden may not be distributed equally.

THE LANGUAGE OF NUMBERS: Is the Address of the Burden Changing?

The most concrete way to understand how the tax system works is to look at budget figures rather than rhetoric. Because the figures clearly reveal from which sources the tax is collected and which items public revenues are based on.

While central government budget revenues were realized as 6 trillion 277.7 billion TL in the first five months of 2026, budget expenditures reached 7 trillion 334.7 billion TL. In the same period, the budget deficit was 1 trillion 57 billion TL. This picture clearly shows Turkey's need for strong and sustainable public revenues. However, the critical question here still does not change: How much of this revenue is provided from which tax types and, therefore, from which segments of society?

It is also noteworthy for this reason that a significant portion of tax revenues in Turkey is still obtained through consumption. Items such as domestic VAT, Special Consumption Tax (ÖTV), and import VAT are taxes that the citizen encounters directly in their daily life. These taxes, which are easy and regular sources of revenue for the state, turn into a direct cost of living for households, especially in low and middle-income groups.

What is important here is not the claim that consumption taxes are entirely wrong. These taxes are also necessary for the financing of public services. The real issue is where the center of gravity of the tax system lies. If a significant portion of public revenues is provided from consumption, while the share of taxes collected from income and wealth remains limited, the redistributive power of the tax system weakens. Indeed, the reports of the Revenue Administration also show that tax composition continues to be an important topic in terms of fiscal policy.

Therefore, the issue is not only the question of “How much tax does the state collect?” The more important question is this: On whom is the burden of the collected tax concentrated?

Because as budget revenues increase, public finance may strengthen; but if the distribution of the tax burden is not fair, this increase cannot be expected to contribute to social welfare to the same extent. Increasing tax revenues may be necessary from a financial perspective; but which tax sources you use to do this is decisive in terms of economic justice.

INCOME IS UNEQUAL, BURDEN IS ALSO UNEQUAL: Who Does the Tax System Protect?

When discussing the justice of the tax system, it is necessary to look at how it affects income distribution after collection, as much as from whom the tax is collected. Because a well-designed tax system does not only finance public expenditures; it also reduces the income inequalities produced by the market economy to some extent. If tax policy cannot fulfill this function, the redistributive power of the social state also weakens.

Income distribution data in Turkey clearly reveal why this debate is important. According to the 2025 Income Distribution Statistics of the Turkish Statistical Institute (TÜİK), while the top 20 percent with the highest income receive 48 percent of total income, the share of the lowest 20 percent is only 6.4 percent. The P80/P20 indicator, calculated as the ratio of the highest income group to the lowest income group, was 7.5; and the Gini coefficient was realized as 0.410.

These figures alone do not prove that the tax system is unjust. However, they raise an important question: To what extent can the tax and social policy system reduce existing income inequality?

Because the social function of tax is not only to create resources. The redistribution of resources collected through tax to society through education, health, social security, social assistance, housing, transportation, and other public services is also one of the fundamental goals of fiscal policy. Therefore, the success of the tax system should be measured not only by how much revenue it provides to the budget, but also by the extent to which it balances economic and social inequalities.

The critical issue here is this: Who does the tax system tax more, and who does it protect to what extent? For this reason, a fair tax system must be able to answer not only the question of “Who earns how much?” but also the question of “Who owns how much wealth and how is this wealth taxed?”

Tax justice cannot be achieved only by everyone paying tax. What is important is that everyone pays tax in proportion to their economic power and that the collected resources return to the common welfare of society in a fair manner. Because in an economy where income distribution is already unequal, if the tax system cannot reduce this inequality, or even forces low-income groups more through consumption taxes and other burdens, the problem ceases to be just a taxation technique. This turns directly into a matter of social distribution.

TAX ON INCOME, WHERE IS WEALTH?

Discussing tax justice only through income means ignoring a significant portion of economic power. Because income and wealth are not the same thing. While income refers to earnings obtained in a certain period; wealth represents economic power accumulated over years. A person's salary or commercial earnings show their income. The residences, lands, company shares, financial assets, and other economic values they own constitute their wealth.

This distinction is extremely important in terms of Turkey's tax justice debate. Because economic power can arise not only from income earned by working, but also from the appreciation of assets owned. Especially high value increases in real estate and financial assets can significantly increase a person's economic power without any major change in their current income.

According to the OECD's 2023 comparison, the share of taxes collected on property within total tax revenues is at the level of 5.1 percent across the OECD. In Turkey, this share is around 3 percent. Of course, it would not be correct to reach the conclusion directly from this data that wealth owners in Turkey are not taxed sufficiently. The structure of tax systems, forms of ownership, and taxation methods differ between countries. However, this picture is noteworthy in that it shows that taxes collected on wealth and property have a limited weight in the tax composition in Turkey.

The question that needs to be asked here is not only “Who earns more income?” One of the more important questions is this: “Who owns how much wealth and how is this wealth taxed over time?”

Because inequality in income distribution and inequality in wealth distribution can feed each other. The ability of those with high income to save and invest more can allow them to accumulate more assets over time. Accumulated wealth, in turn, produces new income. Thus, income can turn into wealth, and wealth can turn back into income, paving the way for economic advantages to be transferred across generations.

Tax justice is not just “taking more tax from those who earn a lot.” It also means “taking a contribution from those with high economic power, regardless of the source of this power, in proportion to their ability to pay.”

A structure that taxes income and largely leaves wealth outside the system can, over time, perpetuate not only income inequality but also wealth inequality. And at this very point, another important heading of tax justice arises: Why does the state give up on some revenues, and who actually benefits from this renunciation?

REVENUE THE PUBLIC GIVES UP: Incentive or Privilege?

Tax justice cannot be measured only by how much tax the state collects from citizens. Another question that is at least as important as this is: Which tax does the state give up, why, and for whose benefit?

Revenues that the state does not collect as a result of exceptions, exemptions, and deductions applied for certain economic, social, or sectoral purposes are expressed as “tax expenditures” in public finance. These practices can be important tools of economic and social policies when designed correctly. Tax incentives that support investment, employment, production, exports, R&D, or certain social goals are legitimate and necessary elements of public policies.

However, what is critical here is not the existence of the incentive; but its purpose, scope, duration, and result.

According to the 2025 Activity Report of the Revenue Administration, the ratio of tax expenditures to national income fell from 6.5 percent in 2023 to 5.1 percent in 2025. And for 2026, it is targeted to reduce this ratio to 4.7 percent. Because every tax that the state does not collect has a cost. Tax that does not come out of the citizen's pocket is a revenue given up for the public; and a resource that could be used in another area for the budget. The cost of a tax advantage provided to one segment can be borne indirectly by other segments of society.

Tax expenditures, unlike budget expenditures, can often escape public attention more easily. However, just as a direct expenditure made from the budget is questioned, a tax that is not collected must also be questioned to the same extent. Transparency gains importance exactly here. The public should be able to see not only how much tax the state collects, but also from which revenues it gives up how much, and to whom and to what extent this renunciation provides benefits.

Ultimately, every tax the state gives up is an invisible public resource. If it is not clear for whom, for what purpose, and in return for what this resource is used, the boundary between tax policy and privilege policy also becomes blurred. For this reason, a fair tax system must be able to answer not only the question of “Who pays how much tax?” but also the question of “For whom does the state give up how much tax?”

RESOURCE FOR THE PUBLIC, JUSTICE FOR SOCIETY: How Should the Balance Be Established?

Turkey needs sufficient and sustainable public revenues for a strong social state. The healthy fulfillment of the duties undertaken by the public, from education to health, from social security to disaster preparedness, from infrastructure investments to local services, necessitates a sound financial structure. For this reason, the issue is not to reduce or eliminate tax; it is to bring the tax burden to a fairer, more predictable, and more sustainable structure.

Indeed, the fact that Turkey's total tax burden is below the OECD average does not mean by itself that more tax should be collected. The real need is the expansion of the existing tax base and a fairer distribution of the burden. The OECD also recommends for Turkey the expansion of the tax base, the strengthening of the scope of income tax, and the increase of the redistributive capacity of public finance.

For this, there is a need for a tax architecture that primarily reduces excessive dependence on indirect taxes and increases the share of direct taxes. Secondly, the tax base must be expanded. While the tax of a wage earner in the same income group is deducted regularly at the source, the fact that informal or under-declared incomes remain outside the system damages tax justice. For this reason, the fight against informality should not only mean more audits. The strengthening of digital data infrastructure, more effective analysis of inconsistencies between income and expenditure, the development of data sharing between different institutions, and the protection of the taxpayer who pays their tax regularly should be handled together.

Thirdly, wage earners must be protected against the inflation-induced tax bracket problem. The brackets in the tax tariff should not evaluate the nominal income increases of employees as if they were real welfare increases. Fourthly, wealth and capital gains, as much as income, must be made a part of tax justice. The goal here is not to punish being a wealth owner; it is to establish a reasonable taxation balance between different sources of economic power. In a system where labor income is taxed regularly, capital gains, real estate earnings, and wealth transfers must also be evaluated within the framework of the ability-to-pay principle.

Fifthly, tax expenditures must be made more transparent and result-oriented. Every revenue that the state gives up through exceptions, exemptions, and deductions actually means giving up an alternative use of public resources. For this reason, every incentive must have a specific purpose, duration, performance indicator, and measurable result. Sixthly, tax policy must be thought of together with social policy. Reducing the tax burden on mandatory consumption of low-income households should not be limited to only lowering tax rates on some products.

Above all of this, there is a more fundamental principle: Trust in the tax system.

If the citizen believes that the tax they pay is collected fairly, that others also contribute in proportion to their economic power, and that the collected resources are used for the public good, voluntary compliance with tax strengthens. In contrast, the citizen's thinking that one segment pays its tax regularly, while another segment remains outside the system with exceptions, informality, or different advantages, damages not only tax revenues but also the trust relationship between the state and the citizen.

Therefore, Turkey's need is not only to collect more tax; it is to collect tax from a wider base, with a fairer distribution, and with higher social trust. Because a good tax system should not be built on taking the highest possible amount from the citizen's pocket; it should be built on taking more from those with high ability to pay, less from those with low ability to pay, and building trust that everyone is treated fairly. The real success of tax should be measured by the sense of justice that figure creates in society, as much as the size of the figure entering the budget.

CONCLUSION: Tax Justice is the Mirror of Social Justice

Reading the tax debate only through budget revenues and public finance would mean missing the most important dimension of the issue. Because tax, beyond the economic relationship between the state and the citizen, is a powerful indicator that also reflects the society's understanding of justice. From whom how much tax is taken, who is protected to what extent, and how the collected resource is used; also shows in whose favor and to whose detriment the economic order works.

Turkey's need today is not only more tax revenue. What is needed is a fairer tax system.

This system should be based on a structure that takes ability to pay as a basis, reduces the weight of taxes collected through consumption, taxes income and capital gains more balancedly, does not ignore wealth accumulation, protects wage earners from the pressure of inflation-induced tax brackets, fights effectively against informality, and constantly evaluates tax exceptions on the basis of public interest.

However, tax justice is not limited only to how tax laws are written. How the collected resource is spent, as much as how the tax is collected, is also a part of justice. If the citizen can see the return of the tax they pay in education, health, social security, infrastructure, disaster preparedness, and other public services, trust in tax strengthens. The thought that tax is not collected fairly or that public resources are not used fairly weakens social trust.

For this reason, tax policy and social policy cannot be thought of separately from each other. Resources taken through tax must return to society in a way that will improve the living conditions of the disadvantaged segments of society, strengthen equal opportunity, and increase social mobility.

The fundamental principle here is extremely clear:

Taking more tax from those who earn a lot in proportion to their ability to pay, and less from those who earn little; limiting the burden on mandatory consumption, and accepting that economic power stems not only from labor income but also from capital and wealth.

Because if a low-income citizen in a country spends a large portion of their income to meet their basic needs and pays tax on every expenditure; if a wage-earning employee pays their income tax before they even receive their salary; in contrast, if segments with high economic power do not contribute to the same extent through the income and wealth they possess, the tax system is not only collecting income, it is also reproducing existing inequalities.

However, the purpose of tax should not only be to fill the state's coffers. Tax is also the financing mechanism of social solidarity and common life. Public services that we all benefit from, from education to health, from justice to infrastructure, from social security to disaster preparedness, are financed with the contribution of all of us.

For this reason, opposing tax and demanding that tax be collected fairly are completely different from each other.

The issue is not less tax; it is the issue of fairer tax.

The issue is not only transferring more resources to the budget; it is the creation of this resource with a fair burden sharing among different segments of society.

The issue is not only the question of “who pays how much tax?”

The real issue is this:

Who pays how much tax in proportion to their economic power?

Because tax may be the same for everyone; however, the burden of tax is not the same for everyone.

And it should not be forgotten:

Where tax is not fair, it is quite difficult for income distribution to be fair; and where income distribution is not fair, it is quite difficult for permanent and inclusive social welfare to be formed.

For this reason, tax justice is not just a fiscal policy preference, it is the mirror of social justice.